Foreign investment in North East manufacturing could dry up if Britain votes to leave the European Union , Foreign Secretary Philip Hammond has warned.

He said the car industry, which employs thousands, would be particularly hurt by a decision to quit the EU.

Japanese motor giant Nissan employs 6,000 at its site in Sunderland - the largest plant in the history of the UK car industry. In January it announced a further investment of £26.5 million to produce a future generation of electric vehicle batteries.

Mr Hammond was speaking to the Chronicle as the battle for Britain’s future was firmly underway, following Prime Minister David Cameron’s announcement that a referendum on EU membership will be held on June 23.

The Foreign Secretary also said:

The remaining EU countries will punish Britain if it quits by forcing us to pay a high price for access to EU markets

The UK could be forced to open its borders to the EU’s 500 million citizens even if it leaves

A decision to quit the EU would be permanent - but if the country chooses to stay, it could change its mind 20 or 30 years later

Mr Hammond said foreign firms wanted to invest in the UK because it is an English-speaking nation with a commitment to free trade and a legal system they trusted - and which gave them access to the EU market of 28 countries and 500 million people.

He said: “I think people both in the North East in particular will recognise the benefits that Britain has been able to enjoy as a very attractive, some would say preferred location, for inward manufacturing investment to service the European Union markets.

“The car industry in particular has benefitted from the combination of Britain’s very strong industrial heritage, very attractive environment for foreign manufacturers to come and set up plants and invest and create jobs, while at the same time being able to offer a domestic market of 500 million people.

“The car industry - and the people who work in the car industry are not of course just the car manufacturers but the huge supply chain - will recognise very well that the kind of volumes of cars they are producing would never be sustainable on the back of the British market alone.”

EU membership allowed firms to export cars made in the UK without paying tariffs, but it also made sure their interests were represented when EU rules and regulations were drawn up, he said.

Mr Hammond said: “It’s by being part of that process that we protect British workers and British jobs in the North East.”

He added: “I know from my travels around the world that it is Britain’s role as an English-speaking . . . country that is inside the European Union that makes it so attractive as a destination for inward investment.

“It is a business-friendly climate which brings with it access to this huge market of 550 million. And we would be putting a huge amount of economic security at risk if we were to leave the European Union.”

Campaigners who want the UK to leave the European Union say we would be able to negotiate a new trade agreement with the EU after we left.

But Mr Hammond said other EU countries would be “deeply hurt” if the UK quit - and could make us pay a heavy price in return for an agreement.

“If we vote to leave the European Union we will have to negotiate with the remaining 27 countries what kind of terms of access they would prepared to give us to the single market and what price they will extract from us for that access.

“I don’t believe the other 27 countries of the European Union will be driven in that negotiation by a desire to see Britain as successful and as prosperous as possible outside the European Union. Far from it.

“Many of them will be deeply hurt, deeply injured that we have left the EU. They will believe that our actions have threatened the EU and possibly threatened their own political arguments in their own home countries, where they too will have eurosceptics.

“I don’t think they will be looking to do us any favours or to cut any sweet deals with Britain. They will be looking to drive a very hard bargain with us for whatever access we are able to secure to the single market.”

If the UK does choose to remain in the UK in the June 23 referendum, it could still change its mind in the future, the Foreign Secretary said.

“Nothing says we can’t ask ourselves this question again in the future. In 20 or 30 years time. If we find Europe is not heading in the direction we want it to.

“Leaving the European Union would be final and irreversible. If we find outside that life is colder and more inhospitable than some people imagined, it will be to late to do anything about it.”

The UK would not regain control of its borders if it left the EU, Mr Hammond said.

Rather, it would need to continue to allow entry to EU citizens as a condition of a trade deal, he argued.

“Unless we were prepared to cut ourselves off altogether from the single market we would not be able to regain control of our borders, we would not be able to regain control of our migration policy.

“Every country which has a single market agreement wth the EU has had to accept not only that they contribute to the EU budget just as they would if they were member states but that they have to have free movement of labour between their country and the EU countries.

“Switzerland, Norway, Iceland all have to face those burdens. It’s the price the pay for access to the single market.

“I don’t believe British business will be able to prosper without being able to access the single market. 47 per cent of our exports go to Europe.”